Toshiba Consults With Private Equity Firms Over ‘Strategic Ideas’

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Where do we go from here? Japanese conglomerate Toshiba is in talks with at least four private equity firms for strategy ideas

Troubled Japanese conglomerate Toshiba is reportedly talking with a number of private equity firms as it explores its future options.

According to Reuters, Toshiba is in talks with at least four global private equity firms including KKR & Co and Blackstone to seek their ideas for its new strategy, three sources with knowledge of the matter reportedly said.

The other two firms are said to be Bain Capital and Canadian investment firm Brookfield.

Troubled times

Toshiba has been mired in difficulties for over five years now.

Problems began in early 2015 when it was discovered that Toshiba had overstated its operating profits by a total of 151.8 billion yen (£780m).

Even worse, the CEO of Toshiba was found to have been aware of a profit inflation scheme going back to 2008. The CEO and a number of other executives at the time resigned as a result.

In 2017 Toshiba sold a large part of its NAND chip unit to a consortium led by Bain Capital, in a deal worth $18bn.

Toshiba has also offloaded its television business to Hisense and its white-goods business to China’s Midea Group.

Toshiba has also previously struggled to contend with a possible delisting from the Tokyo Stock Exchange as well as a bitter legal tussle with Western Digital, as it sought funds to cover billions of dollars in liabilities arising from the bankrupt US nuclear unit Westinghouse.

In 2019, it closed down its nuclear business NuGen in the UK after failing to find a buyer for it.

In August 2020 Toshiba made the historic decision to exit the laptop altogether, when it sold its final stake in PC maker Dynabook to Sharp.

Strategic ideas

And now Toshiba is said to be in talks with four big name private equity firms, Reuters reported, although this doesn’t necessarily mean it is trying to solicit buyout bids for parts, or all of the company.

The step, however, indicates that Toshiba is engaging with potential bidders since shareholders ousted its chairman in June.

That happened after an investigation concluded that Toshiba had colluded with Japan’s trade ministry to block investors from gaining influence at last year’s shareholders meeting – a finding that put corporate governance at Japan Plc under the spotlight, Reuters reported.

After the departure of its chairman, Toshiba launched a full review of its current assets, and also pledged to engage with potential strategic and financial investors.

“As announced, Toshiba’s strategic review committee is considering and discussing a wide range of initiatives without delay,” Toshiba said in a statement to Reuters.

Toshiba “plans to present the achievements when we announce the new business plan in October”, it said, but declined to comment further.

Bain, Blackstone and KKR declined to comment, while Brookfield did not immediately respond to a Reuters request.

Toshiba still makes a range of industrial products (such as escalators) and defence equipment, and it remains one of Japan’s few manufacturers of nuclear power reactors.

Any potential sale is therefore likely to require approval from the Japanese government.

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Author: Tom Jowitt
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